US Bank Earnings Preview: What Signals Will JPMorgan, Goldman Sachs, Citigroup, and Wells Fargo Send?
Overview
In the coming week, the six largest U.S. banks will report third-quarter earnings within a two-day window. According to Reuters' October 8 earnings preview, JPMorgan Chase, Goldman Sachs, Citigroup, and Wells Fargo will report on October 13, followed by Bank of America and Morgan Stanley on October 14. Wells Fargo confirmed in its earnings schedule announcement that results will be released around 7:00 a.m. ET, with a conference call scheduled for 10:00 a.m.
What makes this earnings round worth positioning for in advance is the divergence between expectations and stock prices. The same Reuters report noted that large banks' third-quarter profits could rise by as much as roughly 20% year-over-year, with no signs of deterioration in credit quality, yet the KBW Bank Index has fallen about 13% from its August closing high and is down 6% for the third quarter overall. The market is voting with its feet to express a concern: when the 10-year Treasury yield rises to a multi-decade high, does a high-rate environment deliver net interest income expansion for banks, or does it backfire through higher deposit costs, slower trading and underwriting, and credit risk? This earnings round will provide the first data-backed answer.
Key Takeaways
Rising profits and falling stock prices coexist. Reuters cited LSEG consensus estimates as of October 7 showing JPMorgan's third-quarter EPS forecast at $5.94 versus $5.07 a year earlier; Wells Fargo at $1.85 versus $1.66; and Citigroup at $2.41 versus $2.24. Profit expectations are broadly higher, but the bank index has retreated about 13% from its August high.
The yield curve is the source of this divergence. According to the Federal Reserve's H.15 interest rate statistics, the 10-year Treasury yield stood at 5.28% on October 7, while the 2-year was at 4.77%. The rapid rise in long-end yields has both lifted asset-side pricing and depressed the market value of existing securities portfolios.
Investment banking guidance divergence is more pronounced than ever. JPMorgan expects third-quarter investment banking fees and trading revenue to both grow in the mid-to-high teens range year-over-year, while Bank of America previously warned of at least a 10% year-over-year decline in investment banking fees, and Goldman Sachs expects a relatively subdued third quarter with FICC relatively weak while equities remains strong.
Credit conditions are still improving rather than deteriorating. The Fed's credit card loan delinquency rate series shows that the credit card delinquency rate for all commercial banks was 2.85% in Q2 2026, declining for eight consecutive quarters and below the cycle high of 3.22% in Q2 2024.
Capital return capacity has been confirmed by stress tests. In its 2026 stress test results, the Federal Reserve stated that all 32 tested banks remained above minimum CET1 requirements, with the aggregate CET1 ratio declining 1.6 percentage points under a severely adverse scenario, and that this year's results would not change capital requirements for large banks.
The most critical information may not be in the third-quarter numbers. The Federal Open Market Committee meeting on October 27-28 follows closely after earnings, and management's commentary on fourth-quarter net interest margins, deposit costs, and deal pipelines will likely determine stock price direction more than the already-reported quarterly data.
Earnings Week Schedule and the Market's Core Contradiction
Six major banks lay out their answers within two days
The density of this reporting round determines its informational value. On the morning of October 13, JPMorgan, Goldman Sachs, Citigroup, and Wells Fargo will report almost simultaneously, covering all major business lines including investment banking, trading, consumer credit, and wealth management; on October 14, Bank of America and Morgan Stanley will fill in the remaining pieces. Because the six institutions have significantly different balance sheet structures, they will produce six different readings of the same macroeconomic environment, which is why bank earnings season has traditionally been viewed as an economic health check.
For investors, what really matters is not comparing each bank's EPS against consensus estimates one by one, but treating the six reports as six responses to the same questionnaire: in a high-rate environment, has asset-side revenue expansion been offset by liability-side costs, can the recovery in capital markets activity extend into the fourth quarter, and is consumers' repayment capacity still solid?
Expectations rising, stock prices falling
Reuters' preview provides a quantitative description of this divergence. Large banks' third-quarter profits could rise by as much as roughly 20% year-over-year, but the KBW Bank Index has fallen about 13% from its August closing high and is down 6% for the third quarter, precisely because bond yields have risen to multi-decade highs. UBS bank analyst Erika Najarian attributed the bank stock pullback directly to rising yields in a client note and pointed out that investors need confirmation of three things from this earnings round: that capital markets pipelines are sufficiently robust, that loan growth remains on track, and that deposit cost increases are within controllable range.
In other words, the market does not doubt the third-quarter profit numbers; it doubts their sustainability. When long-end rates remain above 5%, any crack in any link will be amplified, and earnings are precisely the only way to test whether cracks exist.
The Two Sides of High Rates
The race between net interest income and deposit costs
Net interest income is the most critical variable in this earnings round. When asset-side repricing outpaces liability-side repricing, net interest margins expand; once depositors begin moving demand deposits en masse into money market funds or term products, deposit beta rises, and improvements in net interest margins are quickly consumed.
Current industry data leans optimistic. According to the Federal Deposit Insurance Corporation's second-quarter industry briefing, the industry-wide net interest margin rose 1 basis point quarter-over-quarter to 3.32%, net income was $90.1 billion, up 12.0% quarter-over-quarter, return on assets was 1.37%, and domestic deposits grew 0.8% quarter-over-quarter, marking the eighth consecutive quarter of increase. Deposits are still flowing in rather than out, which is direct evidence that deposit costs have not yet spiraled out of control.
Angel Oak Capital Advisors senior portfolio manager Cheryl Pate expressed a similar view in Reuters' preview, stating she does not expect a large-scale migration of deposits as customers chase higher yields, nor does she expect a sharp rise in deposit costs. However, this is precisely what earnings need to verify, because the September rate hike was only recent, and deposit pricing transmission typically lags by one to two quarters. Wells Fargo CFO Mike Santomassimo said at the September Barclays Global Financial Services Conference that third-quarter net interest margin will be better than previously expected, with full-year net interest income maintained at guidance of approximately $50 billion.
Loan growth still in expansion territory
Loan growth determines whether net interest margin improvements can translate into real revenue growth. The same FDIC industry briefing showed that industry-wide loans grew 1.8% quarter-over-quarter and 6.8% year-over-year in the second quarter, and explicitly described the growth as broad-based rather than concentrated in individual categories. Santomassimo said at the same conference that Wells Fargo's 2026 loan growth will be better than its previous mid-single-digit guidance.
The significance of this data for bank stock valuations is that it shows high rates have not yet crushed credit demand. The signal to truly watch for is simultaneous weakening in both volume and price—that is, loan balances stopping growth while net interest margins peak—which typically means economic activity is contracting. That combination has not yet appeared.
Unrealized losses on securities portfolios resurface
Long-end yields rising to multi-decade highs inevitably brings back memories of the 2023 lesson. Bond portfolios held by banks generate unrealized losses when yields rise; unrealized losses on available-for-sale assets are recorded in other comprehensive income and erode book equity, while held-to-maturity assets, though not marked to market daily, become real losses when forced to sell.
Pate offered a relatively measured view in Reuters' report, noting that most banks have since shortened portfolio duration and managed corresponding risks, so she does not expect a repeat of the scale of unrealized loss impact seen in 2023. Shorter duration means smaller market value losses from the same magnitude of yield increases, but this does not mean unrealized losses have disappeared. What to actually examine in earnings is the change in the other comprehensive income line, duration disclosures for securities portfolios, and whether management conducted portfolio restructuring during the quarter.
Divergence in Investment Banking and Trading
M&A and IPO data provide the backdrop
Capital markets activity is the most elastic component of this earnings round. According to Reuters citing LSEG statistics on October 1, global M&A deals grew 28% to $3.9 trillion in the first nine months of 2026, the highest level for the same period since 2001, but deal count fell 8%; third-quarter M&A volume was $993 billion, down 41% quarter-over-quarter, falling below $1 trillion for the first time since Q2 2025. On the equity financing side, global equity issuance raised $284 billion in the third quarter, down 26% quarter-over-quarter but up 39% year-over-year; year-to-date IPO proceeds excluding SPACs reached $215 billion, the highest since 2021.
This data describes a market whose rhythm has been interrupted by interest rates: strong full-year totals, but a marked slowdown in the third quarter. LSEG statistics also show deal counts declining, meaning total volume growth is mainly driven by large transactions, and fee contributions from such deals are highly concentrated, with distribution among different investment banks being very uneven. JPMorgan global head of M&A Charlie Bouckaert said in the same report that strong long-term trends such as artificial intelligence are driving deal activity, and he expects 2027 to remain an active year. Goldman Sachs co-head of EMEA M&A Carsten Woehrn said boards are feeling a stronger sense of urgency in pursuing strategic transactions.
The yield surge already had real impact by late September. Reuters' earnings preview mentioned that IPOs for Oura and SB Energy were postponed due to rising yields, and such delays directly affect the quarter-to-quarter attribution of underwriting fees.
Guidance differences are already on the table
At the September Barclays conference, several major banks gave unusually clear and directionally opposite guidance. JPMorgan expects third-quarter investment banking fees and trading revenue to both grow in the mid-to-high teens percentage range year-over-year. Bank of America CEO Brian Moynihan warned of at least a 10% year-over-year decline in third-quarter investment banking fees, with sales and trading revenue roughly flat. Goldman Sachs CEO David Solomon described the third quarter as relatively subdued, with FICC relatively soft while equities continues to be strong. Morgan Stanley described its investment banking pipeline as still robust.
This divergence is more informative than aggregate data. It shows that in the same market environment, differences in business structure are amplifying performance gaps: institutions strong in large-scale M&A and equity trading are benefiting, while those reliant on mid-market underwriting and fixed-income market-making are under pressure. For investors, this means one bank's results cannot be used to infer the entire sector.
Key Watch Points for Each of the Six Banks
JPMorgan Chase
October 13
Whether investment banking fees and trading revenue can deliver on mid-to-high teens growth guidance, and management's description of the fourth-quarter pipeline
Goldman Sachs
October 13
Whether equities strength can offset FICC weakness, and the extent to which rising non-compensation expenses and provision changes erode profits
Citigroup
October 13
Whether return on tangible common equity can exceed the 11% target, and the incremental buyback scale relative to 2025
Wells Fargo
October 13
The magnitude of better-than-expected loan growth, sustainability of net interest margin improvement, and consumer credit performance
Bank of America
October 14
Whether the investment banking fee decline stops at 10%, and whether net interest income can offset the drag from capital markets businesses
Morgan Stanley
October 14
Net inflows in wealth management, the pace of M&A pipeline realization, and business growth from AI-related financing
Citigroup's watch points have clear management guidance as a reference. CFO Gonzalo Luchetti said in September that full-year return on tangible common equity is expected to be slightly above the 11% target, and 2026 buybacks will exceed 2025's $13 billion. He succeeded Mark Mason in the CFO transition announced in November 2025 and officially assumed the role in March, making this his first full-year framework, so the market will pay particular attention to the credibility of his guidance.
Turning a watch list into an actionable trading plan before earnings are released is more valuable than chasing news afterward. See how to trade Citigroup and other U.S. stocks on MEXC
Credit Quality and Capital Return
Consumer credit is currently improving
Credit card delinquency rates are the most direct indicator of whether high rates have already hurt consumers. The Fed's series on credit card loan delinquency rates for all commercial banks shows a reading of 2.85% in Q2 2026, below Q1's 2.91% and Q2 2025's 3.04%, declining for eight consecutive quarters and down 37 basis points from the cycle high of 3.22% in Q2 2024.
The New York Fed's Q2 Household Debt and Credit Report provides another angle. As of the end of Q2, total U.S. household debt stood at $18.771 trillion, down 0.1% quarter-over-quarter; credit card balances were $1.263 trillion, up $21 billion quarter-over-quarter and up $54 billion year-over-year; the annualized rate of newly delinquent credit card accounts (90+ days past due) was 6.97%, roughly flat versus 6.93% a year earlier. Balances growing while delinquency rates remain flat suggests consumers are still adding leverage, but repayment capacity has not yet shown systemic cracks.
Provisioning therefore becomes a key judgment point in earnings. If banks proactively increase provisions while credit indicators have not yet deteriorated, it typically signals that management's macro outlook for the fourth quarter and next year has turned cautious. Goldman Sachs has previously flagged that provisions would rise due to several individual factors, and such language needs to be confirmed in earnings as to whether it is isolated or a trend.
Capital return capacity has already been tested
The Fed's annual stress test released on June 24 provides the capital-side benchmark. All 32 tested banks remained above minimum CET1 requirements under a severely adverse scenario, with the aggregate CET1 ratio declining 1.6 percentage points
